In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend policies consistent with their financial needs. This circumstance is an illustration of: the residual dividend policy. dividend irrelevance theory. the clientele effect. the signaling hypothesis. Consider the case of Purple Sage Producers Inc., and answer the question that follows: Purple Sage Producers Inc. is an oil drilling company and has some free cash flow that is not expected to be used to finance future growth or potential investment projects. The company plans to distribute its free cash flow to its shareholders but is still deciding whether the distribution should take the form of a stock repurchase or the payment of a cash dividend. Which of the following is a characteristic of a firm's optimal dividend policy? It maximizes the firm's earnings per share. It maximizes the firm's stock price. It maximizes the firm's total assets. It maximizes the firm's return on equity. Modigliani and Miller argued that each shareholder can construct his or her own dividend policy. This statement is: False True